Magazine publishers have been pushing Apple to let them use their own payment …

Share this story

After being actively courted by Apple CEO Steve Jobs, several magazine publishers have launched digital versions of titles like Wired, Popular Science, Time, and People targeted toward iPad owners. Most of these digital versions include more than just text and pictures—some offer video and audio, others include interactive diagrams. While consumers seem to like the idea of carrying interactive magazines around in one compact device (not unlike the appeal e-books have), they have mostly balked at paying premium prices for each individual issue. Time Inc. has reached a deal with Apple to allow regular print subscribers access to issues for free, but the compromise still leaves room for improvement.

Most digital magazines consist of a "container" reader app that offers access to individual issues via in-app purchasing. These typically sell for $3-5 per issue. But reading through the reviews on most such apps, it's clear that many readers don't relish ponying up cash for each issue. In some cases the digital version is more expensive than the dead-tree version on newsstands, and in all cases is significantly more expensive than typical subscription rates.

Publishers want to offer subscriptions, and have been pressing Apple to allow them to use existing payment systems. However, App Store guidelines don't allow third-party payment systems inside iOS apps. This is why, for instance, tapping "Get Books" in Kindle for iPhone opens the online Kindle Store in Mobile Safari.

Time Inc., publisher of People, recently worked out a compromise that allows current subscribers to access issues within the app for free. The latest version of the People iPad app has an "I'm a subscriber" button. A current People subscriber can enter their subscriber number, which is verified with Time's servers. Once verified, the current issue can be downloaded for free. There is even an option to use local notifications to alert you when the next issue is available for free download.

We spoke to a source familiar with the deal, who explained that the new option wasn't previously limited by technology. "It was an Apple policy question," the source told Ars. "So far, they've rejected publishers' efforts to launch digital subscription products on the App Store unless they already have a digital business."

"What magazine publishers want: let us take the subscriber to our own servers, get their credit card numbers, and fulfill" the subscription, the source said. "Apple has denied that request so far."

People reached the compromise with Apple, according to our source, which allowed adding the feature to authorize current subscribers. Time will add the feature to its other iPad magazine apps, including Time, Sports Illustrated, and Fortune. Fortune's Philip Elmer-DeWitt postulated that other publishers would likely follow suit.

One tack that publishers haven't yet explored is offering an in-app purchase for multiple issues. If print subscribers can be authorized to access individual issues for free, it should be possible to offer an in-app purchase for 12 issues for a $19.99 price, for instance.

Our source said that Time was focused on being able to use its own payment systems, which the current compromise allows to a limited degree. Sending all the payments through the in-app purchasing system would mean that publishers would lose 30 percent of the subscription price. Perhaps worse, they wouldn't be able to collect the valuable subscriber data that ad sales departments use to attract advertisers.

Still, there may be workarounds for these problems. The loss of a portion of the subscription revenue can be made up for by the lack of printing and postage, which digital versions don't require. Local notifications could remind users to renew their subscriptions before they expire. And, assuming Apple wouldn't reject the functionality, apps could ask for some simple demographic data before allowing in-app purchasing of a subscription. Apple's guidelines prevent automatically collecting data from the device without a user's consent, but there's nothing that prohibits an app from asking for the data outright.

Our source suggested this may be a method that publishers could explore in the future, assuming Apple didn't have any objections to the practice. Let us know in the comments if you would subscribe to digital magazines if the option was available.